Shar McLaughlin, owner of Irish Green Lawn Care, has seven employees. She offers coverage to five full-time workers and is eager to see how these options compare with those available via the federally run health insurance marketplace, which opened for enrollment this month.
“I will be reading everything I can get my hands on, but the bottom line is whatever is the best insurance at the best price,” McLaughlin said.
Businesses with less than 50 employees can shop on the marketplace and potentially receive tax credits. But they’re not required to offer insurance, unlike larger companies, which must provide affordable health care or face financial penalties starting in 2015.
Buy For Less grocery has 14 stores and 1,150 employees in the central Oklahoma area. After extensive research, company management decided it will continue providing insurance to full-time workers.
“If we want our people to stay a long time and for our business to be competitive, it’s important to offer good benefits,” said Max Dubroff (pictured), Buy For Less human resources director.
While both businesses will offer coverage, each has its own individual circumstances to consider.
“I can’t think of any employer of any size that doesn’t need to give it some thought,” said Cori Loomis, an attorney with Crowe & Dunlevy, located in Oklahoma City, who helps advise employers.
Though penalties of the employer mandate (“play-or-pay”) are delayed until 2015, that doesn’t mean businesses shouldn’t take steps now to understand new requirements.
“People ask me if I’m swamped, but we say, ‘No, we’re not,’ and that scares us because our clients don’t even know to ask or realize that they need to do anything,” Loomis said.
Vicki Murray, a certified health care reform specialist who works with the Central Oklahoma Workforce Investment Board, agrees many Oklahoma employers aren’t yet taking these regulations seriously, thinking they have more time. But along with understanding the penalties, she said employers also must prepare for the extensive reporting process they need to maintain in connection with employees’ insurance options.
“The initial reaction is they aren’t going to send in personal information unless required, but employers will need to do at least a couple of test runs to know their process runs smoothly when they’re required to deliver it,” Murray said.
Information businesses must collect and report the hours employees worked, which will determine whether it falls in the 50-plus workers category. Only those on the job 30 hours or more each week are required to have insurance from a large business, while part-time employees are excluded.
These companies must offer affordable insurance with “minimum value” coverage, or plans that pay at least 60 percent of the cost of care. Coverage is “affordable” if it’s less than 9.5 percent of an employee’s wages or a person’s federal poverty level.
Insurance plans should include no exclusions for pre-existing conditions and must provide “essential benefits,” which include, among others, maternity care, mental health services and prescription drugs. Children (up to age 26) of employees also are required to be covered with employer insurance, while spouses aren’t included.
Rather than wait, Buy For Less has been making adjustments to meet ACA rules for more than two years. This includes switching from a small insurance plan to a bigger provider — Blue Cross Blue Shield of Oklahoma — that allowed the company to have more discounts.
“We have three tiers [of coverage] that are affordable and meet the criteria of the ACA,” said Dubroff. “We did it then so we don’t have to go through the pain of organizations that are going through that now.”
While some businesses make insurance a priority, others don’t believe the benefits outweigh the financial strain.
“When they do the math, many of them find it’s more cost effective to pay the penalty than it would be to provide insurance coverage to employees,” said Mark VanLandingham of the Greater Oklahoma City Chamber of Commerce.
This fine will likely be $2,000 per full-time employee.
Others are trying to decrease their workforce to less than 50 employees or are making more employees work part-time hours so they won’t be required to provide insurance.
“This isn’t good for job growth and expansion, so it’s really having some bad, unintended consequences,” said VanLandingham.
Some business owners also fear the excise tax (or “Cadillac tax”), which would create a 40 percent tax on higher-cost employer insurance plans starting in 2018. The highcost rate is $10,200 for individual plans and $27,500 for a family before future inflation.
“They really don’t want to reduce their coverage, but they can’t afford the Cadillac tax,” said Murray.
McLaughlin still believes making sure her employees have medical insurance is the “right thing to do,” even though her business is small.
Also, Dubroff said Buy For Less is still sustainable, even with the new regulations.
“We may potentially have to cut back in some ways with these changes, but we don’t want to make cuts in the people areas,” Dubroff said.